By Paul J. Davies

U.S. stocks opened higher Friday, a day after investors pulled money out of riskier companies such as technology firms in favor of safe-haven assets such as government bonds.

The recovery Friday illustrated that even as investors have grown more wary about the effects of the U.S.-China trade standoff on the U.S. and other economies, they remain cautiously optimistic about the future of corporate profits.

The Dow Jones Industrial Average rose 142 points, or 0.5%, to 25633 shortly after the opening bell. The S&P 500 climbed 0.6% and the Nasdaq Composite added 0.7%.

Elsewhere, the Stoxx Europe 600 rose about 0.7%. Hong Kong's Hang Seng was up 0.3% and China's Shanghai A-shares were flat, while the Nikkei 225 slipped 0.2%.

In currency markets, the dollar softened, with the WSJ Dollar Index down 0.11%, while the British pound rose after a week of declines as U.K. Prime Minister Theresa May announced Friday she would resign in two weeks to allow a new leader to try to break log-jammed efforts to agree a way to leave the European Union.

The problem for investors is in working out how much economic damage the U.S.-China trade row might inflict and how politicians and central banks will react. Most major central banks apart from the U.K. appear more likely to ease monetary policy than raise interest rates in the months ahead, which should support markets.

The U.S. economy is among the least dependent on international trade in the world, according to Mark Haefele, chief investment officer in UBS's Global Wealth Management division, and the White House is confident that any economic damage to the economy will be limited.

"When it serves his interest, President Trump takes tariffs off as quickly as he puts them on, so things can change quickly," Mr. Haefele said." But we don't see the U.S. or China hurrying to reach a deal, and the risk of miscalculation is growing."

Worries about the economic impact hit oil prices hard Thursday, with Brent crude prices dropping more than 4.5% for their biggest one-day fall since Christmas eve 2018. Brent partly recovered Friday morning, rising nearly 1.5% to $68.83.

Government bond prices slipped and yields rose slightly Friday, rowing back on the trend of investors' growing preference for safety that has pushed yields generally lower all year. U.S. 10-year Treasury yields were back up to 2.322% from 2.296% on Thursday, which was their lowest level since early December 2017.

Write to Paul J. Davies at paul.davies@wsj.com

(END) Dow Jones Newswires

May 24, 2019 09:52 ET (13:52 GMT)

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